David McCullough Library E-book Box Set

by David McCullough

  Bunau-Varilla arrived at Hay’s front door at the hour stated and it was not a moment too soon, as he had just learned from Joshua Lindo that Amador, Boyd, and Arosemena had departed from New York and were due in Washington in a matter of hours.

  When reporters outside Hay’s house asked the envoy if he was there to sign the treaty, the reply was that he did not know.

  He was received with inordinate solemnity, the Secretary now addressing him as “Excellency.” It was his wish, Hay said, providing his Excellency was in agreement, to sign the treaty to permit the construction of the interocean canal. Bunau-Varilla, responding in similar tone, said he also was fully prepared to sign–“at the orders of Your Excellency.”

  They then went over the document, the text of which, with the exception of only a few small alterations, was that submitted by Bunau-Varilla. In Article II, he had used the expression “leases in perpetuity” to describe American control over the canal zone. Hay preferred to have it read “grants to the United States in perpetuity the use, occupation and control . . .”

  “You see,” said Hay, “that from a practical standpoint it is absolutely synonymous.” No other substantive change had been suggested.

  “If Your Excellency agrees to it the Treaty will now be read and we will then sign it.”

  Bunau-Varilla without hesitation agreed and suggested that the reading be “abridged as far as possible.” Time was very much on his mind. They had been together now for approximately forty minutes.

  According to Hay’s letter to his daughter, it was exactly seven o’clock when they signed “the momentous document.” They were in a small drawing room with blue walls overlooking the square and the lights of the White House. It was two years to the day, Hay noted, since the signing of the second Hay-Pauncefote Treaty. Bunau-Varilla had brought no seal with him, so Hay gave him a choice either of his own signet ring (a ring, as Hay explained, that Lord Byron had worn the day he died) or a ring with the Hay family arms. For Bunau-Varilla it was the one difficult decision of the hour and, as he later stressed, “I had not a long time to think it over.” He chose the family seal.

  The pen was dipped in an inkwell that had once belonged to Abraham Lincoln. Bunau-Varilla signed first, in a small, rapid, controlled hand, just beneath the final line of the pact: “Done at the City of Washington the 18th day of November in the year of our Lord nineteen hundred and three.” Then Hay affixed his own large, clear signature, and with a few final words presented the pen to the envoy extraordinary.

  “We separated not without emotion,” Bunau-Varilla would recall, “and I hastened back to my hotel . . .” In another two hours he was at the railroad station to greet “the travelers with the happy news!”

  He was standing on the platform as the Panamanians stepped off the train and his first words were these: “The Republic of Panama is henceforth under the protection of the United States. I have just signed the Canal Treaty.”

  According to Bunau-Varilla’s own account, Amador looked as though he was about to faint. Federico Boyd, again according to Bunau-Varilla, was no less able to mask his “consternation.” But as the story would be told later in Panama, considerably more than consternation was expressed. The Panamanians had been by stages incredulous, indignant, then livid with rage. Federico Boyd is said to have hit Bunau-Varilla across the face.

  In the days that followed, Boyd kept insisting that Bunau-Varilla had acted without authority, illegally, specifically contrary to his written instructions. Bunau-Varilla, with marked impatience, assured him that any such protestations were quite pointless, “as everything is finished.”’

  The treaty had only to be ratified by the United States Senate and by the government of Panama, and Bunau-Varilla was determined to obtain immediate ratification from Panama, before the treaty went to the Senate, a move the three Panamanians absolutely refused to be party to. He warned that a special mission from Bogotá was expected in Washington at any time to treat with the Americans and that the surest guarantee against any possible trouble was to confront that mission with a ratified treaty. He took Amador and Boyd to see Hay, trusting to the conciliatory effect of the old diplomat’s grace and courtesy, and Hay even went so far as to promise a supplementary treaty to correct any possible defects. But it was all to no avail. They were without authority to act on the treaty, the Panamanians told the American Secretary of State; nor would they retreat from that position when, after leaving the State Department, Bunau-Varilla accused them of bad manners and warned that they had made a “decidedly bad impression” upon the Secretary.

  So once again the kinetic Frenchman decided he must remove matters from “inexpert hands” and place them in his own, and it was this next phase of his activities, more even than the hurried signing of the treaty, that would be regarded in Panama as his great act of treachery.

  Though he and the three Panamanians were barely speaking by this time, it was agreed among them that the actual treaty would be sent to Panama on the City of Washington when the ship sailed the following Tuesday, and that they would all convene in New York to officiate over the placing of the document safely on board.

  Bunau-Varilla, however, left Washington before the others and on Saturday, November 21, without consulting any of them, he sent the entire text of the treaty by cablegram to Panama’s new Minister of Foreign Affairs, Dr. F. V. de la Espriella. He informed the minister that the commission had behaved very poorly before American officials and that Panama’s sudden caution and unwillingness to cooperate were proving an embarrassment to the government in Washington, which was being condemned by its political enemies for having acted with undignified haste in recognizing Panama. He wanted immediate ratification of the treaty by Panama and “the immedate expedition of telegraphic instructions” so that he might inform Washington. The treaty, he warned, would not be sent to the Senate until Panama did its part.

  The reply from Minister de la Espriella did not reach Bunau-Varilla at the Waldorf until Monday night and it was negative. Amador and Boyd, he was certain, had intervened, had cabled Panama to ignore his advice and to give no sanction to his treaty.

  Nonetheless, they all convened as agreed the following morning in Bunau-Varilla’s usual room, Number 1162, where, he reminded them, their liberation had been prepared. The treaty was placed in an envelope, the envelope was wrapped in the flag of Panama and was placed in a small safe filled with cotton. The safe was sealed; then in a body they went out the door with it.

  When the City of Washington sailed that afternoon, the safe was on board and Bunau-Varilla was on his way back to Washington. He had decided, he later explained, “to shake off the web which I felt was being woven about me.”

  The evening of the twenty-fifth, he sent a 370-word cable to Minister de la Espriella that struck an entirely new note of fear. If the government of Panama failed to ratify the treaty immediately upon the treaty’s arrival at Colón, then the almost certain consequence would be an immediate suspension of American protection over the new republic and the signing of a canal treaty with Bogotá.

  Possibly, as would be suggested, John Hay had had something to do with this astonishing message. Bunau-Varilla never implied as much, but Hay was to remark later in a letter to Senator Cullom that “we” insisted on immediate ratification.

  In any event, it was the ultimate knife at the throat and wholly spurious. The notion that Roosevelt would abandon Panama at this point, that he would leave the junta to the vengeance of Colombia, that he would now suddenly turn around and treat with Bogotá, was not simply without foundation, but ridiculous to anyone the least familiar with the man or the prevailing temper in Washington. Nothing of the kind was ever even remotely contemplated at the White House or the State Department.

  “This time I hit the mark,” Bunau-Varilla was to exclaim. “The Government of Panama was at last liberated from the morbid influence of its delegation.” The following day, November 26, he received cabled instructions from Panama–from Arango, Tomas A
rias, Manuel Espinosa, and Minister de la Espriella–to notify Washington officially that the treaty would be ratified and signed as soon as it arrived at the Isthmus.

  The provisional government of Panama kept its pledge. The treaty was formally approved, unanimously and without modification, on December 2, less than one month after the revolution and just five days before Congress was due to convene in Washington.

  The debate in the Senate began at once, with John Tyler Morgan and Hoar, of Massachusetts, a dogged anti-imperialist, leading the assault not simply on the treaty, but on the means by which Panamanian independence had been obtained and on the President’s conduct. As it was, however, for all the acrimony that filled the pages of the Congressional Record, comparatively little fault could be found in the treaty, even among those most inclined to oppose anything put forth by the Administration. In one long speech, for example, Senator Hernando de Soto Money, of Mississippi, an old ally of Senator Morgan’s and diehard champion of the Nicaragua route, conceded that the treaty “comes to us more liberal in its concessions to us and giving us more than anybody in this Chamber ever dreamed of having . . . we have never had a concession so extraordinary in its character as this. In fact, it sounds very much as if we wrote it ourselves . . .”

  Support for the measure, moreover, was massive and led by Spooner, Cullom, and Lodge. The forthcoming Presidential election helped solidify Republican ranks. So to all practiced observers the outcome seemed foreordained. “The debates will be long and heated,” wrote Dr. Herrán, “but there is no doubt that the treaty will be finally approved.” The one missing element this time was Mark Hanna. Ill, exhausted from a successful campaign to make his friend Myron Herrick governor of Ohio, Hanna remained in his rooms at the Arlington Hotel, slowly dying.

  In a letter written February 10, Roosevelt told his son Theodore, Jr., that Panamanian opposition seemed “pretty well over.” On the same day, Dr. Herrán closed the Colombian legation and notified John Hay that he was departing for home–“with crushed spirits and broken health,” as Herrán wrote to a friend. He would die soon afterward.

  On February 15 Mark Hanna died at age sixty-six, and soon there-after, on February 23, 1904, the Senate ratified the treaty by a vote of 66 to 14.

  II

  In Panama a National Constitutional Convention had convened in the capital city on January 15 and completed its labors in less than a month. The new constitution was generally in accord with that of the United States, but with some notable added provisions. Only the government could import or manufacture arms, for example. No president could succeed himself, nor could he be succeeded by any member of his family. Citizenship could be suspended for habitual intoxication.

  The government was divided into three parts, the legislative, executive, and judicial, the delegates in the legislature and the president being elected by popular vote. And with the work of framing the constitution completed, the convention at once resolved itself into a National Assembly and elected Manuel Amador the first president. His inauguration took place in Cathedral Plaza on February 20, 1904, three days before Senate ratification of the Hay-Bunau-Varilla Treaty.

  The nation over which the new government presided extended from the Costa Rican border on the west to Colombia on the east, where the precise location of the border line would remain undetermined and a rankling issue for years to come.

  Since no complete survey of the country had ever been attempted, its total area could only be approximated. It was thought to be from 30,000 to 35,000 square miles. In fact, with the Colombian border resolved, Panama was something less than 30,000 square miles (29, 208, not counting the Canal Zone). So it was about the size of South Carolina, smaller than Portugal or Scotland, larger than Ireland or Sierra Leone. Its population in 1904 was estimated at 350,000, which was roughly the population of the District of Columbia.

  From a strictly economic perspective, the future appeared grand beyond imagining. The long night at Panama, the years of economic stagnation since the demise of the Compagnie Universelle, was ended. The one significant, hopeful development in the local economy during the 1890’s had been in banana production, as a result of the systematic efforts of an American entrepreneur, Minor C. Keith. Though the origins of the entire banana trade dated back to the 1860’s when, as an experiment, small shipments were made from Colón to New York by a man named C. A. Frank, it was not until Keith began buying up land on Chiriquí Lagoon, west of Colón and established enormous banana plantations there, that production of the fruit on the Isthmus became a serious, large-scale enterprise. At Bocas del Toro, on Chiriquí Lagoon, once a tiny Negro village, thousands of acres were under cultivation and the population by the early 1900’s was perhaps nine thousand. Keith talked of eventual rail connections from Panama all the way to New York. He “saw into the banana future and builded for it,” in the words of one account. In 1899 he had joined forces with the Boston Fruit Company (which had plantations on Jamaica and Cuba) to form the United Fruit Company, which at its inception was the world’s largest agricultural enterprise. To many on the Isthmus it had seemed that the banana was to be Panama’s economic salvation.

  But now construction of the canal promised the return of boom times, prosperity that would surely surpass even the French era. There would be all the commensurate demands for local goods and services, and payment this time in dollars. With the United States committed to the task, no one appeared in the least doubtful that it would be completed, that not very far off in the future, Panama was to be what Simon Bolivar had once prophesied, “the emporium of the universe.”

  As a physician, Amador foresaw sweeping advances in sanitation and an end to centuries of plague. Panama could become a model for all the tropics.

  On the more immediate level, his country was also commencing operations from the unique position of being wholly debt free. Instead of a national debt, Panama had what amounted to a national endowment in the form of the stipulated $10,000,000 payment from the United States. Of this some $750,000 was kept in hand as working capital; roughly $2,000,000 was applied at once to much-needed public works; while the major portion, approximately $6,000,000, was very profitably invested in first mortgages on New York City real estate, the arrangements for this being handled by Panama’s designated fiscal representative in the United States, J. P. Morgan & Company, and by Panama’s appointed New York counsel, William Nelson Cromwell.

  First payment of the $10,000,000 was made on May 2, when Morgan & Company received a Treasury draft for $1,000,000, of which $200,000 was promptly shipped to the Isthmus. On May 19, two weeks after Panama formally transferred control of the Canal Zone to the United States, Secretary of the Treasury Leslie Shaw paid Morgan & Company the remaining $9,000,000, the greater part of which was to be retained in New York.

  It was, however, the far larger financial transaction between Washington, New York, and Paris that most concerned the Roosevelt Administration, attorney Cromwell, J. P. Morgan, Philippe Bunau-Varilla, and the scores of others involved on two sides of the North Atlantic.

  The purchase of the French holdings at Panama was the largest real-estate transaction in history until then. The Treasury warrant for $40,000,000 made out to “J. Pierpont Morgan & Company, New York City, Special Dispensing Agent,” was the largest yet issued by the government of the United States, the largest previous warrant having been for the $7,200,000 paid to Russia for Alaska in 1867. Participation by the house of Morgan had been agreed to by both the buyer and the seller and in late April, prior to receipt of the Treasury warrant, J. P. Morgan sailed for France to oversee the transaction personally. His bank shipped $18,000,000 in gold bullion to Paris, bought exchange on Paris for the balance, and paid the full sum into the Banque de France for the account of the Compagnie Nouvelle and the liquidator of the Compagnie Universelle. On May 2, at the offices of the Compagnie Nouvelle on the narrow, little Rue Louis-le-Grand, the deeds and bills of the sale were executed. On May 9 in New York the United States repaid the $40,0
00,000 to the house of Morgan. Morgan’s fee for services, charged to the Compagnie Nouvelle, was $35,000.

  With the $10,000,000 paid to Panama and the $40,000,000 to the Compagnie Nouvelle, the United States had spent more for the rights, privileges, and properties that went with the Canal Zone–an area roughly a third the size of Long Island–than for any actual territorial acquisition in its history, more than for the Louisiana Territory ($15,000,000), Alaska ($7,200,000), and the Philippines ($20,000,000) combined.

  At the then exchange rate, $40,000,000 came to 206,000,000 francs. By an earlier private contract the directors of the Compagnie Nouvelle and the liquidator of the Compagnie Universelle had agreed that approximately 38 percent of any future canal profits would go to the Compagnie Nouvelle and 62 percent to the liquidator. Thus the Compagnie Nouvelle now received 77,400,000 francs; the liquidator, 128,600,000. So as it worked out, shareholders in the new company, the largest of whom were the penalty shareholders such as Eiffel and the brothers Bunau-Varilla, received 130 francs per share, which was the equivalent roughly to a 3 percent return on their investment over the ten uneasy years since the company had been organized. The Bunau-Varilla firm, for example, recovered all of its 2,200,000-franc stake ($440,000) in the Compagnie Nouvelle, plus a profit of about 66,000 francs, or $13,200.

  When the liquidator distributed his 128,600,000 francs among some 200,000 claimants–all bondholders in the old Compagnie Universelle– the return on their investment came to approximately ten cents on the dollar. Stockholders in the old company received nothing.

  Cromwell, who placed the value of his services to the Compagnie Nouvelle at $800,000, was forced to wait another several years as the fee was arbitrated in Paris. In 1907 the firm of Sullivan & Cromwell was awarded the sum of $200,000.